READ THE CITIZENS' VOICE

Digital Only Subscription
Read the digital e-Edition of The Citizens' Voice on your PC or mobile device, and have 24/7 access to breaking news, local sports, contests, and more at citizensvoice.com or on our mobile apps.

Digital Services
Have news alerts sent to your mobile device or email, read the e-Edition, sign up for daily newsletters, enter contests, take quizzes, download our mobile apps and see the latest e-circulars.

Contact Us
See department contacts, frequently asked questions, request customer service support, submit a photo or place an ad.

Article Tools

The impending merger of Blue Cross of Northeastern Pennsylvania and Highmark, the huge Blue Cross insurer based in Pittsburgh, probably is inevitable.

Based in Wilkes-Barre, Blue Cross of Northeastern Pennsylvania has had a close working relationship with Highmark for years. Highmark invested $34 million in two for-profit Blue Cross NEPA subsidiaries in 2005 and it also is the local insurer's contracted claims processor. The two companies jointly offer Medicare Advantage products. And just three months ago, Highmark announced that it would seek a "stronger affiliation" with Blue Cross of Northeastern Pennsylvania, making the merger announcement a logical progression.

Regulatory approval by the state Insurance Commission is required for the merger. But this proposal doesn't create problems that have led to rejected merger proposals in the past.

Highmark is the state's largest health insurer and the seventh largest in the nation. In 2009 it and Independence Blue Cross of Philadelphia, the state's second largest health insurer, ended their merger plan after state Insurance Commissioner Joel Ario threatened to reject it. The combined companies would have captured 51 percent of the state health insurance market and about $17 billion in annual premium revenue.

Blue Cross of Northeastern Pennsylvania is the smallest of the state's four Blue Cross companies. Its proposed combination with Highmark does not threaten the same level of market dominance as the IBC proposal, even though it would enable the combined company to sell insurance in 62 of the state's 67 counties.

There are 37 Blues nationwide and Pennsylvania is the only state with more than two. The merger still would leave it with three - Highmark, Independence Blue Cross and Capital Blue Cross of Harrisburg. A completed merger might force Capital Blue Cross and Independence Blue Cross into a merger of their own, but even then the state would have more Blues competition than most other states. Highmark, for example, is the lone Blue Cross provider in West Virginia and Delaware.

Highmark had 4.3 million subscribers, $15.2 billion in premium revenue and $4.1 billion in reserves at the end of 2012. Blue Cross NEPA had 550,000 subscribers, $750 million in revenue and $304 million in reserves.

Several industry experts have said that the merger could make available more insurance products at better prices, which would be good for consumers and the economy.

But the merger will carry a price for the region. Both companies cited greater efficiency as a driving force for the merger. Over the long-term, that likely will mean shifting more work into Highmark's workforce of 20,000, at the expense of jobs in Blue Cross of Northeastern Pennsylvania's workforce of 750.

The merger plan requires the new entity to maintain a "significant workforce in Northeastern and North Central Pennsylvania" and to "make efforts to maintain local staffing levels." The company will not create administrative and clerical redundancy, however.

The plan also calls for $100 million to be donated to an unspecified foundation for health and economic development in BC NEPA's region. The company-affiliated Blue Ribbon Foundation now handles that function. Under the proposal, $90 million would come from NEPA and $10 million would come from the newly combined company.

The Insurance Department announced that it would conduct a public hearing on the merger in Northeast Pennsylvania. That should draw out the specifics regarding universal acceptance of Highmark insurance by local providers and the impact on premiums, health care providers and employment.

Consolidation of insurers and providers might well be the inevitable direction of the health care marketplace, but that doesn't relieve regulators of their obligation to make it work in the greatest possible public interest.

We welcome user discussion on our site, under the following guidelines:

To comment you must first create a profile and sign-in with a verified DISQUS account or social network ID. Sign up here.

Comments in violation of the rules will be denied, and repeat violators will be banned. Please help police the community by flagging offensive comments for our moderators to review. By posting a comment, you agree to our full terms and conditions. Click here to read terms and conditions.